Question

Pronghorn Corp.’s statement of financial position at the end of 2019 included the following items:

Current assets		$1,275,000			Current liabilities		$994,200
Land		30,700			Bonds payable		1,281,000
Buildings		1,150,000			Common shares		192,000
Equipment		322,000			Retained earnings		189,000
Accumulated depreciation—buildings		(149,000	)
Accumulated depreciation—equipment		(12,600	)
Intangible assets—patents		40,100
Total		$2,656,200			Total		$2,656,200

The following information is available for the 2020 fiscal year:

1.		Net income was $398,000. Interest paid is classified as operating activities.
2.		Equipment (cost of $21,200 and accumulated depreciation of $8,030) was sold for $10,700.
3.		Depreciation expense was $4,040 on the building and $9,200 on equipment.
4.		Amortization expense on a patent was $3,080.
5.		Current assets other than cash increased by $40,000. Current liabilities increased by $24,000.
6.		An addition to a building was completed at a cost of $32,800.
7.		An FV-OCI investment in shares was purchased for $20,900 on the last day of the year. This was the first such investment made by Pronghorn in its history.
8.		Bonds payable of $75,200 were issued at par.
9.		Cash dividends of $192,000 were declared and paid. Dividends paid are treated as financing activities.

Pronghorn prepares financial statements in accordance with IFRS.

(a)

Prepare a statement of financial position (SFP) as at December 31, 2020. (Hint: You will need to adjust (“plug”) the December 31, 2020 amount of current assets to ensure the SFP balances.)

Answer 1

Financial Statements for year 2020

1. Proft and Loss Account for year 2020

   Net Income 398000

Depreciation:

Building 4040

Equipment 9200

Loss on sale of Eqp 2470

Amortisation 3080

lDividend paid 192000

Net Profit    187210

2. Balance Sheet for the year 2020

Current Liabilities 1018200 Current Asset     1315000

Bonds 1356200 Cash 33190

Tangible Asset:   

Common Share 192000 Land 30700

Retained earning 187200 Building 1029760

Equipment 287030

Intangible Asset 37020

Investments   20900

2753600 2753600

Notes to Accounts

Equipment

Cost price $21200-$8030= $13170

Sale price $10700

Loss on sale of asset= $ 2470